Rehoboth Beach budget doing better than expected
Buoyed in large part by real estate transfer taxes coming in significantly higher than projected, Rehoboth Beach’s budget appears to be weathering the coronavirus storm better than expected.
City Manager Sharon Lynn updated city commissioners on the city’s finances during a special meeting Dec. 7. She said, through October, the city had received a little more than $2 million in revenue from transfer taxes. The city budgeted $1.6 million in revenue from the tax for the 2021 Fiscal Year, which runs April 1-March 31.
The city believes a reasonable forecast for transfer tax on the year is above $2.5 million, said Lynn.
After an extremely slow start, Lynn said, it appears the city’s new hotel tax will be close to bringing in the $800,000 worth of projected revenue for this year’s budget. This is the first year the city is collecting a 3 percent lodging tax on hotels, motels and tourist homes in Rehoboth Beach. Gov. John Carney signed a charter change in July 2019.
During a budget update in August, Lynn said the tax had brought in approximately $87,000. More recently, she said, through the end of September, the city had collected $573,000 from the tax. A reasonable projection for a full year of this revenue is $675,000 to $700,000, she said, attributing the jump in revenue to an extended tourist season this year and a conservative approach to projecting how much revenue the city would realize from the tax this year.
While doing better than expected given the worldwide pandemic, not all sources of revenue are meeting or exceeding expectations. Most notable is parking-related revenue, down $2 million from last year.
Revenue from building permits and appeals is also down. Lynn said the city assumed building activity would follow a similar trend to the transfer tax. However, she said at this point, it appears the timing of the building activity may lag beyond the current fiscal year. The shortage may be as much as $200,000, said Lynn, adding there’s been a total revenue decline of about $515,000 this year compared to last year.
As for general fund operating costs, Lynn said the city’s expenses are approximately $509,000 less than last year.
To help offset the loss in revenue, the city is deferring approximately $1.6 million worth of capital improvements.
Commissioners are expected to begin discussing next year’s budget in early January.
Chris Flood has been working for the Cape Gazette since early 2014. He currently covers Rehoboth Beach and Henlopen Acres, but has also covered Dewey Beach and the state government. He covers environmental stories, business stories and random stories on subjects he finds interesting, and he also writes a column called Choppin’ Wood that runs every other week. He’s a graduate of the University of Maine and the Landing School of Boat Building & Design.
